ROOH-UL-AMIN KHAN, J.---Through this single judgment, this Court proposes to answer the following Tax References as common question of law is involved therein. The particulars of the said references are as under:---
(i) Income Tax Reference No, 40/2014 "Commissioner Inland Revenue v. Khalid Umar Khan".
(ii) Income Tax Reference No, 63/2014 "Commissioner Inland Revenue v. Naeem Shahzad".
(iii) Income Tax Reference No, 64/2014 "Commissioner Inland Revenue v. Naeem Shahzad".
(iv) Income Tax Reference No, 65-P/2014 "Commissioner Inland Revenue v. Arbab Amir Ayub, etc".
(v) Income Tax Reference No, 5-P/2015 "Naeem Shahzad v. Commissioner Inland Revenue".
(vi) Income Tax Reference No, 71-P12015 "Arbab Amir Ayub v. Deputy Commissioner Inland Revenue.
(vii) Income Tax Reference No, 8-P12015 "Arbab Amir Ayub v. Deputy Commissioner Inland Revenue".
2. The precise resume of facts of above-referred references is as under:---
(i) In Tax Reference No, 40-P/2014, titled "Commissioner Inland Revenue v. Khalid Umar Khan" the taxpayer is an Individual, dealing in the business of lubricants and derives income from the said business. He filed return of income for the year 2011 by declaring his net income of Rs, 285000/-.
Later on, the Taxation Officer received information about the purchase of vehicle by the taxpayer, against the sale consideration of R. 14,62,000/- hence he was proceeded and ultimately self- assessm ent filed by taxpayer under section 120(1) was amended under section 111(1) (b) of the Income Tax Ordinance, 2001 and the amount of Rs, 14,62,000/- was added to his net income. The above cited assessm ent order was challenged by the taxpayer, before the Commissioner Inland Revenue (Appeal), Peshawar "CIR (A)". Alongwith the appeal, he submitted certain additional documents and the worthy "CIR (A)" while taking into consideration the documents produced alongwith the appeal, deleted the addition by requisitioning wealth statement. The department approached the Appellate Tribunal Inland Revenue, Peshawar Bench, Peshawar "ATIR, Peshawar" through Income Tax Appeal No, 176 (PB) of 2013 which was dismissed vide order dated 8.5.2014.
Hence the above reference petition.
(ii) In Income Tax Reference No, 63-P/2014, Income Tax Reference No, 64-P/2014 titled "Commissioner Inland Revenue v. Naeem Shahzad", and Income Tax Reference No, 5-P/2015 "Naeem Shahzad v. Commissioner Inland Revenue" the appellant an individual deriving income from salary had filed return, in terms of section 120(1) of Income Tax Ordinance, 2001 "Ordinance" and declared his net income of Rs, 480,000/-. In the meanwhile, the Taxation Officer received information that the taxpayer has approved plan for construction of a plot measuring 13198 square feet at Hayat Abad township. The taxpayer was served with a statutory notice to explain his source of income and after fulfillment of all the nodal formalities, his declared assessment version was amended under section 122 (1), 122(5)(ii) and (III) (i) (b) read with section 39 of Ordinance, whereby the value of one Kanal plot in Regilalma scheme (Hayatabad Township) and investment of taxpayer in polyfine chempharma was calculated and total taxable income of taxpayer was declared Rs, 5,480,000. On appeal by the taxpayer the "CIR (A)" while admitting additional evidence accepted the appeal and reduced the value of the plot from Rs, 40,00,000/- to 25,00,000/- whereas deleted the addition made at Rs, 10,00,000/- under' the head of investment in Polyfine Chempharma. Aggrieved from the aforesaid order, the Commissioner Inland Revenue Commissioner" filed appeal before the "ATIR". The taxpayer also assailed order of learned "CIR (A)" dated 21.10.2013 for the tax year 2007. The appeals were disposed of through judgment dated 18.6.2014. Hence the above-cited references.
(iii) Likewise, in Income Tax Reference No, 65- P/2014, titled "Commissioner Inland Revenue v. Arbab Arnir Ayub etc", Income Tax References No, 7-P/2015 and 8-P/2015, titled "Arbab Amir Ayub v. Deputy Commissioner Inland Revenue", the taxpayer is an individual deriving income from salary and business, filed return of income for year 2006 and 2007, declaring net amount at Rs, 208,200/- which was selected for audit and ultimately, after fulfilling the required process, the declared assessm ent version of taxpayer under section 120(1) was amended and determined the total taxable income Rs, 46,342,400/-. Feeling aggrieved with the same the taxpayer filed two separate appeals before "CIR (A)" who vide order dated 1.11.2012 set aside the assessment orders. Both the parties having felt aggrieved by said order filed second appeals before the ATIR, Peshawar Bench, who vide judgment dated 25.6.2013 remanded the case to "CIR (A)" Peshawar wherein appeal of the taxpayer was allowed vide order dated 30.9.2013. Still feeling aggrieved the taxpayer as well as Commissioner have preferred appeals before Appellate Tribunal Inland Revenue (Peshawar Bench) who vide impugned order maintained the order of "CIR (A)". Hence these references.
3. In essence, in all the above cited cases, the learned "OR (A)", by accepting the appeals of taxpayers has deleted addition made in the assessment order. It is worth mentioning here that the worthy "CIR (A)" while accepting the appeal and deleting the addition has based its finding on certain documents produced by the taxpayer during hearing of the appeal which had not been produced before the Commissioner at the dme of original proceedings. The moot common questions formulated in all the references are as under:---- (i) whether on the facts and circumstances of the case, the "CIR (A)' was vested with the power to allow the additional material or evidence in appeal which was not produced in the original proceedings by the taxpayer, despite the fact that ample opportunity in shape of notice was provided to them and as to whether the taxpayer have satisfied the "CIR (A)" by showing sufficient cause which prevented them from producing the same in the original proceedings.
(ii) whether the learned "ATIR (Peshawar)" was justified to rule that the learned "CIR (A)" has not violated section 128(5) of the Income Tax Ordinance, 2001, by admitting fresh documents and deleting the addition in the assessm ent order on the strength of above-mentioned documents.
4. The necessary discussion that will have to follow may be initiated by extracting the relevant applicable section of law i..e, section 128 of Income Tax Ordinance, 2001 which provide procedure for entertaining appeal by "CIR (A)". The text of section 128 of the Ordinance reads as under:--- "128: Procedure in appeal.---(1) . The Commissioner (Appeals) shall give notice of the day fixed for the hearing of the appeal to the appellant and to the Commissioner against whose order the appeals has been made.
(1A) Where in a particular cask the Commissioner (Appeals) is of the opinion that the recovery of tax levied under this Ordinance, shall cause undue hardship to the taxpayer, he, after affording opportunity of being heard to the Commissioner against whose order appeal has been made may stay the recovery of such tax for a period not exceeding thirty days in aggregate.
(2) The Commissioner (Appeal) may adjourn the hearing of the appeal from time to time.
(3) The Commissioner (Appeal) may, before the hearing of an appeal, allow an appellant to file any new ground of appeal not specified in the grounds of appeal already filed by the appellant where the Commissioner (Appeals) is satisfied that the omission of the ground from the form of the appeal was not wilful or unreasonable.
(4) The Commissioner (Appeals) may, before disposing of an appeal, call for such particulars as time Commissioner (Appeals) they require respecting the matters arising in the appeal or cause further enquiry' to be made by the Commissioner.
(5) The Commissioner (Appeals) shall not admit any documentary material or evidence which was not produced before the Commissioner unless the Commissioner (Appeals) is satisfied that ' the appellant was prevented by sufficient cause from producing such material or evidence before the Commissioner."
5. Bare reading of the above-quoted section of law would reveal that during pendency of the appeal, the "CIR (A)" may allow the appellant to add new ground in memo. Of pending appeal, subject to his satisfaction to the effect that the omission of the ground from the form of appeal was not deliberate and unreasonable. Sub- section (4) of section ibid invests the Commissioner (Appeals) with the power to call for the required particulars being necessary for arriving at just and proper conclusion in the appeal and can also make further inquiry in the matter involved in the appeal. Here the word "particulars" used having extreme significance which usually means "specific points, details or circumstances". The legislature very wisely applied the word "particular" instead of "record" because the record generally refers to the documents/ evidence and proceedings on the basis of which an assessm ent order is .passed. The word "record" would have limited and curtailed the powers of "CIR (A)", who would have not been able to go beyond the documents submitted in the proceedings before Commissioner. However the word "particular" has removed the said clog from the "CIR (A)" and now he may call such particulars as required in respect of the matter arising in the appeal. Hence the section ibid empowered the "CIR (A)" to call for "particulars" which of course include "record" but not limited thereto. The last sentence of sub-section (4) of section 128 further empowered the Commissioner (Appeals) to make resort to further inquiry in respect of the matter relating to the appeal. The inquisitorial powers are a characteristic feature of quasi-judicial proceeding. In a strict judicial proceedings further enquiry or calling for other than record material may plunge the Appellate Court in the territory of undue diligence which is against the two pillars of our adversarial judicial system that adjudicator must be disinterested person in the end, of lis and the Court has to rely upon the evidence Produced by the parties to the /is. Reading sub- section (4) of section 128 and 129(1)(a) lead to the conclusion that Commissioner (Appeals) may call for certain information and particulars which were not previously relied upon neither by the revenue nor by the assesee but also has the authority to make further enquiry and whatever documents/ evidence collected during the course of enquiry may "examine as required by him or he deems fit." .
6. Now adverting to the moot question as to whether the "CIR (A) may admit any documentary material in appeal, on cost of repetition we would like to refer to sub-section (5) of the Section ibid which is colched in negative language prohibiting the appellant to produce oral or documentary evidence, as well as abstaining the Commissioner (Appeals) not to admit any documentary material or evidence which was not produced before the Commissioner. However, the Commissioner (Appeals) may do so in the circumstances when he is satisfied that the appellant was prevented by "sufficient cause" from producing material or evidence before the Commissioner.
Section 128(5) has limited scope and permit the Commissioner to seek production of material or evidence to enable him to pass an order in the better interest of substantial justice. Thus the taxpayer/assessee/appellant had no right to produce any additional document or evidence and so far the Commissioner is concerned he has no suo mote authority to ask for production of such documents. The essence of section 128(5), in general forbids the "CIR (A)" to admit additional material or evidence either oral or documentary unless satisfied through sufficient reason that the appellant was precluded to produce it before the Commissioner. For admitting such material the "CIR (A)" shall pass a speaking order by stating and recording plausible reasons.
7. The satisfaction of judicial conscience of the Commissioner (Appeal) to the effect that there was "sufficient. cause" which prevented the appellant from producing such material or evidence at the time of proceedings before the Assessing Officer is sine qua non for the simple reason firstly, the section ibid is couched in negative language secondly the words "shall not" strictly prohibit the "CIR (A)" to admit any additional material or evidence and thirdly, the compliance of second part i..e, "satisfaction" of "CIR (A)" by showing "sufficient reason of prevention" is essential. The word "runless" used in section 128(5) bifurcate and divide the section into two parts., The first part of section ibid place absolute bar on the Commissioner not to admit any documentary material or evidence which was not produced at the time of initial proceedings while the second part empower the Commissioner to exercise discretion for admitting additional documentary material or evidence provided the appellant satisfied him that he was prevented by sufficient cause from producing such material or evidence before the Commissioner. The word "sufficient cause" used in section 128(5) is an expression which is found in various statute. In general parlance it means "adequate justification for something existing or happening". According to the law dictionary sufficient cause" means "having adequate or substantial grounds upon which to do something (e.g. make a ruling) or not to do something). ' Though the expression sufficient cause has not been defined by legislature in the Ordinance, however it being a diluted word of "reasonable cause" and "good Cause" which mean an adequate, enough and good reason to satisfy the intellectual process and mental status of person to do or not to do something. The above phrase provides a guideline for the Commissioner Appeals that while granting permission of additional evidence care is always to be taken to guard against admission of false and fabricated documents. It is not the right of the appellant to be permitted to produce evidence, rather it would only be on the satisfaction of the Commissioner, who shall determine that the additional evidence to be produced are genuine and bringing on record such evidence, before the Commissioner was beyond the control of appellant. The expression "sufficient cause" is sine qua non for satisfaction of the "CIR (A)", however, neither it can be defined precisely nor a specific yardstick can be fixed for its determination. It varies from case to case. The words "sufficient cause" has received attention of Courts invariably, however, consensus is that a genuine or good cause is "sufficient cause", particularly, a cause beyond the control of party would be deemed "sufficient cause",
8. On the test and touchstone of the above definition, the Appellate Court is required to satisfy its judicial conscience for admission of additional material or evidence. Simultaneously, the "CIR (A)" is under legal obligation to state the reasons for its satisfaction while admitting the additional material or evidence. The "CIR (A)" by giving reason for determination shall at least make substantial compliance with requirement of section 128(5), which is mandatory being word "shall" has been used. It should be evident from the order in appeal that the Appellate Court had applied its independent mind consciously to matter involved in admission of additional material. The most important ingredient of section 128(5) is that the appellant shall satisfy the judicial mind of Appellate Court regarding his prevention from producing such documents through sufficient cause before the Commissioner whereas the "CIR (A)" shall state reason for admission of documents through a speaking order, because the validity of order of admission by, the Appellate Court is to be seen from the reasoning and the same is to be challenged by the department again with reference to the reasoning. No doubt, the "CIR (A)" deals with the question of me right of taxpayer and revenue, thus in doing so, it is required to adopt the judicial approach and it must act according to the mandatory provision enumerated in section 128 of the Ordinance. The determination whether a provision of law is directly or mandatory may be ascertained from the words used in the statute. The word shall lays down conclusive duty on the authority that the irremissibly be done in the manner provided by the statute. Section 128 provides that the Commissioner (Appeals) "shall not" admit any documentary material or evidence which was not produce before the Commissioner unless satisfied that the appellant was prevented by sufficient cause from producing such material or evidence before the Assessing Officer. The above-quoted provision of law is not ordinary procedure and it must be construed as mandatory. If it is held that the compliance of the aforesaid provision is optional and not obligatory, then the introduction of the provision by the Parliament shall be a futile exercise and sub-section (5) of section ibid will be surplus age and superfluous for all practical purpose. The provision of section 128(5) attract the principle that if a statute require a thing to be done in a particular manner it should be done in that manner or not at all. This principle was approved and accepted in well-known judgments rendered by the august Supreme Court of Pakistan in cases of "Zia-ur-Rahman v. Syed Ahmad Hussain (2014 SCM R 1015) and "Tehsil Nazim TMA, Okara v. Abbas Ali (2010 SCM R 1437).
9. The Tribunal and quasi-judicial authorities are chastisement. In our view, it will not be far from the under legal obligation to give plausible reason, absence whereof could render the order liable to judicial chastisement. In our view, it will not be far from the absolute principle of law that the Courts and quasi-judicial authorities should record reason for their conclusion to enable the aggrieved party/appellant or higher Courts to exercise their jurisdiction properly and in accordance With law because it is the reasoning alone which can enable a higher or an Appellate Court to appreciate the controversy in issue in its correct and true perspective and to hold whether the conclusion recorded by the Court, whose order is impugned is sustainable in law and whether subordinate Court has adopted the correct legal approach. To that the Court should record detailed reasons for their sub-serve the purpose of justice delivery system, it is essential conclusion and decide the matter through a speaking order. The stating of reason by the administrative and quasi-judicial authorities is a well-accepted norm and its compliance is stated to be mandatory. It is settled law that if the administrative officer having the duty to act judicially or required to set forth in writing the mental process of reasoning which have led them to the decision it would to large extent help to ensure I purpose of the duty to act judicially and exclude arbitrariness and caprice in the discharge of their functions.
10. At the cost of repetition, we may notice that this Court as well as the apex Court has consistently taken the view that recording of reason is essential feature of dispensation of justice. Non- recording of reason could lead to dual infirmity firstly, it may cause prejudice to the affected party and secondly, more particularly, hamper the proper administration of justice. These principles are not only applicable to judicial pronouncement but they apply with equal force and in fact, with a great degree of precision to administrative action and order of quasi-judicial tribunals/authorities.
A non-speaking judgment i..e, without support of any reason causes prejudice to the person against whom it is pronounced as that litigant would be unable to know the ground which weighed the Court in deciding the claim and also cause impediment in his taking adequate and appropriate ground before the higher Courts in the event of challenge to that finding.
11 . In case in hand, the appellate authority while making deletion in the order in original has made recourse to certain documents which were not part of record. The admission of additional evidence in such a manner at the appellate stage is against the mandate of section 128(5) of the Ordinance as the same is not referred to any right of the parties to produce the evidence but is dependent solely on the satisfaction of "CIR (A)" and it is for the "CIR (A)" to decide that the appellant was prevented by sufficient cause from producing such material or evidence before the Commissioner. The mere fact that the evidence sought to be produced is vital and important for decision of the case would not provide a sufficient cause to allow its admission at the appellate stage, specially when the evidence was available to the taxpayer at the initial stage and not been produced by him. The section ibid is not intended to allow the appellant/litigant who has been unsuccessful before the assessing officer/Commissioner to patch up the weak part of his case and fill up omission in the Court of appeal and therefore, statutory law imposed an obligation upon the appellate authority .to firstly satisfy, its judicial conscience that due to sufficient reason the appellant could not produce the document before the assessing officer and then shall record cogent reasons for decision. If the "CIR (A)" can make order without giving reason, then there was no need for legislature to couch the sub-section (5) of section 128 in negative words. The condition of satisfaction of "CIR (A)" is included to introduce clarity and transparency and exclude and minimize possibilities of arbitrariness. It gives satisfaction to the parties and also enable the appellate or supervisory Court to keep the appellate authority within bounds. We have no hesitation to hold that speaking - order at its best be, reasonable and its worst be at least plausible one. From the aforesaid discourse it appears that discretion lies with the "CIR (A)" to admit additional material or evidence in the interest of justice and while doing so it shall pass speaking order giving reasons of its satisfaction for admission of the same which is lacking in the impugned orders. We have also noted that the "ATIR (Peshawar) while upholding the judgment of "CIR (A)" has skipped over the legal objections qua compliance of section 128(5), raised by the revenue in its appeal, which resulted into miscarriage of justice. Thus the impugned order and judgment of "CIR (A)" and "ATIR (Peshawar)" being against the mandatory provision of Income Tax Ordinance are untenable.
OPINION: (i)Section 128(4) invest the Commissioner (Appeals) with the power to call for the required particulars being necessary for arrival at just and proper conclusion in appeal and also make further inquiry in the matter involved in the appeal.
(ii)The first part of section 128(5) places absolute bar on the Commissioner not to admit any documentary material or evidence which was not produced at the time of initial proceedings while the 2nd part empower the Commissioner to exercise discretion for admitting additional documentary material if the appellant satisfy the CIR (A) that he was prevented by sufficient cause from doing so.
(iii)The CIR(A) is under legal obligation to state reason for its satisfaction while admitting the additional material or evidence.
CONCLUSION:
12. In this view of the matter, the question formulated in the reference is answered in affirmative, the order and judgment of "CIR (A)" and "ATIR (Peshawar) are set aside.
' Resultantly, all the cases are remanded to "CIR (A)" for decision afresh after providing proper opportunity of hearing to the parties and to state reason for admitting additional material or evidence, if any, strictly in accordance with the mandate of section 128(5) of Income Tax Ordinance, 2001.
13. Office is directed to transmit copy of this judgment under seal of the Court to the Appellate Tribunal Inland Revenue, Peshawar Bench, Peshawar.
Seven Income Tax References Accepted/